THE BANK of England has blamed Brexit after interest rates were hiked to 0.5 per cent in the first increae in over a decade.

The Bank said Brexit is having a “noticeable impact on the economic outlook” and warned of more rises to come.

Policymakers voted seven to two in favour of the quarter point rise, which marks the first rates increase since July 2007.

The move comes as the Bank looks to dampen Brexit-fuelled inflation, which it predicts will now peak at around 3.2 per cent this autumn.

Mark Carney, the governor of the Bank, blamed Brexit for the move.

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Mark Carney has blamed Brexit for the increase in interest rates

Mr Carney said: “These are not normal times. Brexit will redefine the UK's relationship with our largest trade and investment partner."

The Bank said in a statement: “The decision to leave the European Union is having a noticeable impact on the economic outlook.

“The overshoot of inflation throughout the forecast predominantly reflects the effects on import prices of the referendum-related fall in sterling.

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"Uncertainties associated with Brexit are weighing on domestic activity, which has slowed even as global growth has risen significantly.

“And Brexit-related constraints on investment and labour supply appear to be reinforcing the marked slowdown that has been increasingly evident in recent years in the rate at which the economy can grow without generating inflationary pressures.

"There remain considerable risks to the outlook, which include the response of households, businesses and financial markets to developments related to the process of EU withdrawal."

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The Bank of England has raised the interest rate in response to Brexit

Mr Carney said the move to hike rates was driven by the need to bring inflation down to target.

He said: "It's not so much where inflation is now, but where it's going that concerns us."

He added: "In many respects the decision today is straightforward: with inflation high, slack disappearing and the economy growing at rates above its speed limit, inflation is unlikely to return to the 2% target without some increase in interest rates."